Can one file bankruptcy togetherfor both their business and personal debts or do they have to file for each separately?
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Can one file bankruptcy togetherfor both their business and personal debts or do they have to file for each separately?
I own a small business in a tourist town that has been killed by the economy. I have been forced financially to close. I rent the building, am not working and have a debt of 10- 12k. Personally I have credit card debt of around 12k. These cards were used to start the business and keep it afloat and were obtained when the business was a sole proprietorship (it’s now an s-corp with myself as sole owner and only officer). Can I file once for all my debt or do I need to file individually once for business and once for personal?
Asked on June 22, 2011 under Bankruptcy Law, West Virginia
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
You will need to file separately, because you and the business are separate legal entities: an S-corporation is it's own legal person. If the business were still a sole proprietorship, one filing would do, since legally, you and the business would be one. You should probably consult with a bankruptcy attorney before doing this, to determine what is the best course of action: for example, for yourself, should you choose Ch. 7 (liquidation) or ch. 13 (payment plan) bankruptcy? What type of bankruptcy is best for the business? Or, if you are simply walking away from or shutting down the S-corp, do you even need to file bankruptcy for it? Also, you need to factor in that any S-corp debts which were personally guaranteed by you are your debts, too.
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